Nailing the Business Case for CRM

When one of your product lines has over 2 million permutations, errors are bound to creep in somewhere. And Rockwell Automation, a $4.3 billion provider of industrial automation power and control solutions, has nine different product lines.

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When one of your product lines has over 2 million permutations, errors are bound to creep in somewhere. And Rockwell Automation, a $4.3 billion provider of industrial automation power and control solutions, has nine different product lines. Much of the equipment it sellsincluding mechanical power transmission products, motors, and drives for use in mining and petrochemical productionmust be assembled to order. But with all the possible configurations, as well as 450 sales, manufacturing, and customer support locations spread across the globe, delays and miscommunication are routine parts of business. They also can hinder revenue growth.

By late 1999, the Greenville, South Carolina, division of Rockwell Automation was looking to Internet technologies for a solution. A Web-based CRM system would let the company automate its product configuration process, making sure that salespeople ask all the right questions when taking customers' orders, so they could configure products accurately and fast. "It forces you to capture all the information essential to configuration," says Jim Sneed, vice president of information technology. "That gives customers faster service."

Quicker turnaround times presumably mean more business. But like many companies considering CRM solutions, Rockwell Automation found it difficult to calculate an exact return on investment. All of the evidence was anecdotal.

For example, communication problems between the sales staff and the manufacturing staff clearly were causing troublesome delays. A salesperson would take an order for equipment, enter it, and send it off to the plant.

But often, the salesperson would not enter the order completely, because he or she was not familiar with all the parts and configurations. So a plant manager would contact the salesperson, who would then check with the customer. "You're constantly asking a lot of questions to fill an order," says Chris Blalock, a project manager. "And that takes time."

But how much time? Though an automated system could reduce delays, by how much would it reduce them? And how would that translate not only into improved efficiency but also revenue generation? Salespeople could spend less time answering questions and more time making sales. But how many sales?

"The ROI was a difficult thing to quantify," says Blalock. "We have all these benefits, like reducing the order cycle time and giving customers a warm and fuzzy feeling that salespeople know the products. But what is the equation for it?"

Blalock knew the equation for how things currently stoodthe before snapshot. So Blalock and Lucius Wright Penn, Rockwell Automation's manager of engineering technology, shifted their focus from how good the future will be (the hard calculation) to how imperfect the present is (the possible calculation).

"We pulled together marketing, engineering, and sales, and we learned a lot," says Penn. They quizzed over 100 salespeople and discovered that 25 percent of each salesperson's time was spent clarifying product orders. "That's the equivalent of 25 people basically spending all of their time getting [and giving] information," says Blalock. An average order required 2.5 interactions with the customer, delaying the process and giving the customer time for second thoughts. "Whenever you say, 'I'll call you back,' you risk losing the business," says Penn.

Those numbers, combined with the product demonstrations served up by the three companies it was considering, were initially not enough to get management to sign on to a multimillion-dollar investment.

So, the snapshot was refined even further, with more statistics. "You have to break down the process into touch points, then get the metrics," says Blalock. New metrics included the data-entry errors resulting from salespeople rekeying orders in the sales system incorrectly into the manufacturing system. A single system, which the company chose Selectica to provide, would prevent those errors.

But the true success of the new system would be quantifiable only after deployment. "Until you play with it, touch it, feel it, you don't really know how it will work," says Blalock. So in spring 2000, management signed off on the project's first phase only, covering the company's Dodge Quantis gear motor and reducer product linethe one with the 2 million permutations. The initial deployment would have to justify the next phase.

After the first phase was launched in August 2000, the average number of customer interactions per order had dropped to 1.2. And according to Penn, just six weeks after deployment, "We saw order volumes that were roughly double what they were before."

These figures helped build a case for expanding the system to the next product line, the Reliance Electric brand motor products, in June 2001. The company expects to migrate all of its product lines to the new CRM platform.

The new technology isn't the only thing that's paid off. Looking at ROI and building the case for the investment "made us look objectively at our own business practices," says Blalock. "And there are nonquantifiable benefits just in that."

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